Payment transactions in the retail sector/at the POS - Trends and innovations for 2021

What does the (near) future hold for payment transactions at the point of sale? What challenges must retailers prepare for? One thing is certain: digitalisation will not simply stop when it reaches (regional) retailers. In fact, it should be seen far more as impetus that retailers can and should take advantage of both at the local POS and within their eCommerce presence. Innovative payment processing solutions that are also compatible with omnichannel concepts are needed here.

Customers appreciate flexibility, and even demand it when ordering services.

Easy and convenient payment by using smart technology. The world of payment transactions is changing - not completely and suddenly, but a little bit every day. Payment is becoming more and more convenient. No customer wants to count small change any more. By using Near Field Communication (NFC), we can pay even the smallest amounts by simply holding the card up to the terminal. A survey¹ conducted by the Retail Institute and the German Retail Association (HDE), comprising more than 70 pages, examines not "only" the coming year, but also forecasts developments up to 2025. However, the survey still contains valuable insights for 2021. Particular attention is given to shopping preferences and payment methods right at the start of the survey. The findings can be summarised as follows:
  • Classic means of payment, such as credit and debit cards, are currently still popular and typically demanded by consumers as standard.
  • The popularity of cash is continuing to decline, particularly in very large and small denominations (€500 note, one-cent and two-cent coins)
  • Mobile payment methods will gain market shares. According to the survey, however, retailers would still be well advised to offer incentives for mobile payments.

The survey also states that the ever-present security concerns among customers represent the greatest obstacle in the way of even stronger growth in mobile payments, particularly in Germany. The maxim is: Only cash is real. While additional incentives, such as reward points or faster processing at the till, could certainly help alleviate such concerns, they cannot eliminate them altogether. Mobile wallets, representing all mobile payment options, are therefore on the rise, although they still have not achieved the kind of acceptance that would be necessary to replace classic means of payment on a large scale. As such, it once again comes down flexibility and freedom of choice for retailers. It is therefore clearly important to cater to tech-savvy millennials with mobile payments, while at the same time not losing sight of the fact that 75% of survey respondents would still rather use classic means of payment. It is therefore important to bring the most popular payment methods from the online business to the POS. In the DACH region, these are clearly invoice and installment purchases². Both payment methods can be integrated into a retailer's own loyalty app/customer app or directly into the POS terminals. Another important finding of the survey is that men tend to be far more open and adventurous than women when it comes to trying out new and innovative payment methods. This could potentially have an even stronger influence on the type of payment processing offered in future.

Omnichannel concepts are continuing to gain in importance

Just a local retail shop? Retailers would be well advised to take up omnichannel concepts as a way of preparing themselves more effectively for the future. As the study highlights, these are particularly appreciated by the 16-39 age group, as well as households with medium to high incomes. The following provides some classic examples of omnichannel concepts and habits, which are set to dominate 2021 and the years that follow:
  • Calling up additional product information on your smartphone while in the shop.
  • Buying and paying for bulky products in the shop and the having them delivered to your home.
  • Shopping online and having products delivered to your local shop, for example so you can test them out.
  • Reserving products online for collection, possibly even the same day.
  • Shopping online and returning products to a physical shop.

The "hard boundary" that used to exist between online and offline retail is therefore becoming increasingly blurred. In addition to this, the "Retail Report 2021"³ identifies additional key trends that can, in particular, help local retailers remain relevant in the digital age. These include "ghost stores", in which smartphones, tablets and other IT innovations replace classic personnel, an environmentally friendly eco-delivery for the last mile, including comprehensive personalisation, and the link between offline and online concepts to offer consumers an emotional, positive customer journey that is no longer restricted to just one channel.

Payment types: freedom of choice & even more freedom of choice

Merchants are looking for customised solutions for the payment transactions of the future. Unzer can offer the right mix of payment types here. This applies both to retailers that only sell products at the POS and those that employ omnichannel concepts and therefore offer an online shop together with a POS station. In both cases, digital payment methods deliver significant benefits. Multi-channel solutions guarantee a consistently wide range of payment options for retailers that are tried and tested across many target groups and distribution channels. Thanks to innovative product solutions of this kind, retailers are capable of covering the classic spectrum of payment types such as debit and credit cards, as well as offering contactless digital payment methods. Synergies are now becoming clear at the POS that retailers will continue to encounter long beyond 2021. One example of this (as well as a useful addition to the payment options offered) is the Pay By Link Service, which builds a bridge between classic invoices and digital processing directly on smartphones or tablets. By offering this option, retailers show that they are open to new payment methods, yet without having to sacrifice the tried and tested means of payment. Synergy products of this kind are set to becoming increasingly important in the coming year, in particular with respect to the typical acceptance of German citizens when it comes to classic means of payment.

Switch to digital/mobile payment methods

It would therefore be better to make the switch to digital/mobile payment methods sooner rather than later. In a forecast published on leading statistics portal Statista⁴, experts are currently already anticipating a continuous rise both in the number of consumers wishing to pay by smartphone and the transaction volume generated per consumer. Transaction volumes are displaying strong and continuous growth, thereby substantiating the rising levels of acceptance. In future, smartphones will not only be used for small purchases, but also to pay for larger acquisitions. The fact that more and more big players are fuelling this trend with services such as ApplePay, Google Wallet or Samsung Pay is a massive benefit for the retailer landscape. This generates trust and makes it easier for consumers to overcome their reservations in terms of accepting and integrating new means of payment into their own financial ecosystem.  In-store solutions help POS retailers secure customer loyalty and create a positive customer payment journey, in which consumers feel in good hands, as well as securely and efficiently supported. Another argument FOR taking the step toward further development of the customer payment journey is: risk management. Having a powerful partner at your side with reliable risk management also helps prevent payment defaults, particularly for the retail trade. Helpful tools that will already take advantage of the benefits of digitalisation in 2021 include real-time credit checks. At digital sales locations, these have long since been implemented in such a way that they do not slow down the checkout process and therefore have no negative impact on conversion rates. Freedom of choice, customised solutions and innovative omnichannel concepts: these three key pillars are worthy of special consideration in the coming year - as well as in all subsequent years. The mobile payment trend is likely to drive significant changes in the coming year. As such, consumers will soon consider payment options of this kind necessary, modern, digital and secure and therefore demand them irrespective of shopping basket values. There can be no doubt that this process has been accelerated by the coronavirus pandemic in 2020. This is partly due to the heightened hygiene awareness that makes cash payments in particular seem less attractive and will, even after large-scale distribution of a vaccine, help contactless payment options further expand their dominance.

STILL HAVE QUESTIONS?

Our payment experts are here to help

Do you have questions relating to our products, contracts and prices? Would you like to arrange a face-to-face consulting session? If so, then please get in touch. We will get back to you quickly.

¹ Source: https://einzelhandel.de/images/presse/Studie_Trends_Handel_2025.pdf, ² Source: https://www.ifhkoeln.de/online-shops-ruesten-auf-wieder-mehr-zahlungsverfahren-im-angebot/, ³ Source: https://onlineshop.zukunftsinstitut.de/shop/retail-report-2021/, ⁴ Source: https://de.statista.com/infografik/22166/prognose-zur-nutzung-von-mobile-pos-payments-in-deutschland/